- Created on 08 January 2013
US May Default on Its Debt Half a Month Earlier Than Expected
According to a new analysis by the Bipartisan Policy Center, the US government may default on its debt half a month earlier than expected.
The Washington Post reported that the analysis found that the government will be unable to pay all its bills starting sometime between Feb. 15 and March 1.
The Post also reported that the government hit the $16.4 trillion statutory debt limit on Dec. 31 but the Treasury Department plans to implement "extraordinary measures" in order to delay default for the first two months of 2013.
"Our numbers show that we have less time to solve this problem than many realize," Steve Bell, Senior Director of Economic Policy at the Bipartisan Policy Center, said in a statement. "It will be difficult for Treasury to get beyond the March 1 date in our judgment."
One assumption of the Bipartisan Policy Center's debt-limit deadline is that confusion around end-of-year tax policy could lead to delays in the filing of taxes and refunds. This could taint projections about the nation's finances.
Another assumption is the pace of economic growth. Faster growth tends to lift tax receipts.
It is expected that an attempt to raise the debt limit will likely be Washington's next big battle.
Republicans are looking to demand deep federal spending cuts while President Obama insists that he will not negotiate this point.
The White House has said that the nation probably will default if Congress does not raise the debt ceiling by the deadline.
- Created on 03 January 2013
Boehner Re-Elected Speaker of the House, Despite Concerns from Conservatives
(CNN) -- Rep. John Boehner was voted by his colleagues into another term as House speaker Thursday despite receiving harsh criticism from some conservatives over his handling of the deal to avoid the fiscal cliff.
There were a few scattered votes for other names - defeated Rep. Allen West, the tea party favorite from Florida, and GOP Majority Leader Eric Cantor both received nods - but the vast majority of Republicans in the House shouted Boehner's name when called upon by the House reading clerk. In total, 220 Republicans out of a conference of 234 went for the Ohio Republican during the tension-filled vote on the House floor.
Some GOP lawmakers didn't answer, or simply voted "present," when called to vote.
And Democratic Rep. Jim Cooper bucked his party's leader Nancy Pelosi to cast a vote for former Secretary of State Colin Powell (being a member of Congress is not a requirement to be elected speaker). Pelosi received a total of 192 votes.
Before the vote, some Republicans walking into the House chamber voiced frustration at Boehner's performance as speaker, though the majority said they were supporting him for another two years in the role.
Rep. Justin Amash, a Mississippi conservative who had his Budget Committee assignment removed at the end of last Congress, put forth Rep. Raul Labrador of Idaho as a potential speaker. And Rep. Tim Huelskamp of Kansas, who also had his committee assignment removed, said he was casting a vote against Boehner based on "past performance."
Huelskamp cast his vote for conservative Rep. Jim Jordan of Ohio - who told CNN on his way into the chamber that he was supporting Boehner.
House GOP leaders were confident in Boehner's re-election as they entered the chamber, telling reporters it was all but impossible for another representative to take the gavel.
Boehner himself told CNN he was confident the House would re-elect him speaker, but conceded a few fellow Republicans would likely vote against him.
When CNN asked Majority Leader Eric Cantor if Boehner would be re-elected he replied "absolutely."
House GOP Whip Kevin McCarthy, the number three House Republican, also told reporters he was sure Boehner would be re-elected speaker.
Asked what he thought of all the drama surrounding Thursday's vote, McCarthy replied, "Makes for good press, doesn't it?"
And House Budget Chairman Paul Ryan, the vice presidential candidate in last year's election, make a skeptical "pshaw" when asked if Boehner would be challenged for his post.
Ryan downplayed what it would mean if members voted against Boehner, saying "that happens all the time," noting he's been in Congress eight terms and "it just happens."
CNN Senior Congressional Correspondent Dana Bash contributed to this report.
- Created on 01 January 2013
Senate Passes Fiscal Cliff Deal, Bill Now Moves to Republican-Controlled House
(CNN) -- If a Senate deal to avert the fiscal cliff becomes law, all but a sliver of the U.S. population will avoid higher tax rates, some key issues will be put off for two months, and all sides in the battle will emerge with a mixed record: winning key points, while ceding ground on others.
The deal, which passed the Democratic-controlled Senate in an overwhelming 89-8 vote in the middle of the night, would maintain tax cuts for individuals earning less than $400,000 and couples earning less than $450,000. Technically, it would reinstate cuts that expired at midnight.
The bill faces an uncertain future in the Republican-controlled House, which convenes at noon.
Some GOP lawmakers, including Reps. Phil Gingrey of Georgia and and Tim Huelskamp of Kansas, told CNN Tuesday they won't support the bill.
"It's taxing, and still taxing, small businessmen and women, and I don't like that at all," Gingrey said, referring to some small business owners who would be among those whose tax rates rise.
It's the opposite argument of some Democrats who oppose the bill. Sen. Tom Harkin, D-Iowa, complained that the deal "makes tax benefits for high-income earners permanent, while tax benefits designed to help those of modest means and the middle class are only extended for five years."
The bill temporarily extends certain tax breaks, such as the one for college tuition, while making new tax rates permanent.
It would mark the first time in two decades that tax rates jump for the wealthiest Americans -- giving some bragging rights to President Barack Obama, who has long insisted on such a move.
But it also leaves him breaking a promise. The president had vowed to raise tax rates for the top-earning 2% of Americans, including those with household income above $250,000.
"What I'm not going to do is to extend Bush tax cuts for the wealthiest 2% that we can't afford and, according to economists, will have the least positive impact on our economy," the president said at a news conference in November, after being asked by CNN why Americans should believe he would not "cave again this time" by allowing those Bush-era tax cuts to be extended.
When asked whether closing loopholes instead of raising rates would be satisfactory, the president responded, "when it comes to the top 2%, what I'm not going to do is to extend further a tax cut for folks who don't need it, which would cost close to a trillion dollars. And it's very difficult to see how you make up that trillion dollars, if we're serious about deficit reduction, just by closing loopholes in deductions. You know, the math tends not to work."
The deal passed by the Senate would cap itemized deductions for individuals making $250,000 and for married couples making $300,000.
Raising the threshold for higher tax rates to $400,000 shrinks the number of Americans affected. While nearly 2% of filers have adjusted gross incomes over $250,000, only 0.6% have incomes above $500,000, according to the Tax Policy Center.
Still, in a written statement early Tuesday, the president held on to the 98% figure he has so often touted.
The deal "protects 98% of Americans and 97% of small business owners from a middle class tax hike," he said. "While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay."
The president also acknowledged, "There's more work to do to reduce our deficits, and I'm willing to do it. But tonight's agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans."
However, many Americans are still likely to see their paychecks shrink somewhat, due to a separate battle over payroll taxes.
Senate vote 'sends a strong message'
"Glad it's over," said Senate Majority Leader Harry Reid, D-Nevada, after the vote on the fiscal cliff deal, just a couple of hours after the East Coast rang in the new year. "We'll see if the Republicans in the House can become functional instead of dysfunctional."
A statement from House leadership made no promises.
"Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members -- and the American people -- have been able to review the legislation," the statement said.
A vote could come as early as New Year's Day. The House is scheduled to convene at noon.
Sen. John Hoeven, R-North Dakota, was hopeful the House will follow suit.
"The vote was 89 to 8. Bipartisan vote. 89 votes," he said. "I think it sends a strong message and I think it will be approved by the House."
What the package proposes
Under the Senate package:
-- Taxes would stay the same for most Americans. But they will increase for individuals making more than $400,000 and couples making more than $450,000. For them, it will go from the current 35% to the Clinton-era rate of 39.6%.
-- Itemized deductions would be capped for those making $250,000 and for married couples making $300,000.
-- Taxes on inherited estates will go up to 40% from 35%.
-- Unemployment insurance would be extended for a year for 2 million people.
-- The alternative minimum tax -- a perennial issue -- would be permanently adjusted for inflation.
-- Child care, tuition and research and development tax credits would be renewed.
-- The "Doc Fix" -- reimbursements for doctors who take Medicare patients -- will continue, but it won't be paid for out of the Obama administration's signature health care law.
-- A spike in milk prices will be avoided. Agriculture Secretary Tom Vilsack said milk prices would have doubled to $7 a gallon because a separate agriculture bill had expired.
What's not addressed
While the package provides some short-term certainty, it leaves a range of big issues unaddressed.
It doesn't mention the debt ceiling, and temporarily puts off for two months the so-called sequester -- a series of automatic cuts in federal spending that would have taken effect Wednesday. It would have reduced the budgets of most agencies and programs by 8% to 10%.
This means that, come late February, Congress will have to tackle both those thorny issues.
"We're going to have to deal with the sequester, that's true," said Sen. Max Baucus, D-Montana, "but look, this is better than nothing."
Reid said the agreement was a win for average Americans.
"I've said all along that our most important priority was to protect the middle class families," he said. "This legislation does that."
And maybe a bit more.
According to the U.S. Census Bureau, median household income in 2011 was $50,054, which is well below the tax cut threshold approved by the Senate.
Senate Minority Leader Mitch McConnell, R-Kentucky, praised the effort, but said it shouldn't have taken so long to get an agreement.
"We don't think taxes should be going up on anyone but we all knew that if we did nothing they would be going up on everyone today," he said. "We weren't going to let that happen."
If the bill doesn't pass
There's a lot at stake.
If the House doesn't act and the Bush administration's 2001 and 2003 tax cuts expire, broad tax increases will kick in, as will $110 billion in automatic cuts to domestic and military spending.
The nonpartisan Congressional Budget Office has predicted the combined effect could dampen economic growth by 0.5%, possibly tipping the U.S. economy back into a recession and driving unemployment from its current 7.7% back over 9%.
But if tax-averse House Republicans approve the bill Tuesday -- when taxes have technically gone up -- they can argue they've voted for a tax cut to bring rates back down, even after just a few hours. That could bring some more Republicans on board, one GOP source said.
But Gingrey, speaking Tuesday to CNN, said he does not believe his constituents will see it that way.
He's concerned they will see it as "just more smoke and mirrors, and Congress pulls these stunts all the time," Gingrey said. "Putting off the sequester for two months, kicking that can down the road yet again... this bill, as I see it so far, looks like it's all about raising revenue, but very little, if anything, about cutting spending."
Concerns persist
The White House budget office noted in September that sequestration was designed during the 2011 standoff over raising the federal debt ceiling as "a mechanism to force Congress to act on further deficit reduction" -- a kind of doomsday device that was never meant to be triggered. But Congress failed to substitute other cuts by the end of 2012, forcing the government to wield what the budget office called "a blunt and indiscriminate instrument."
In its place, the Senate plan would use $12 billion in new tax revenue to replace half the expected deficit reduction from the sequester and leave another $12 billion in spending cuts, split half-and-half between defense and domestic programs.
Conservative lobbyist Grover Norquist, whose Americans for Tax Reform group pushes candidates to sign a pledge never to raise taxes, said the plan "right now, as explained" would preserve most of the Bush tax cuts and wouldn't violate his group's pledge.
"Take the 84% of your winnings off the table," Norquist told CNN. "We spent 12 years getting the Democrats to cede those tax cuts to the American people. Take them off the table. Then we go back and argue about making the tax cuts permanent for everyone."
But Robert Reich, who served as labor secretary in the Clinton administration, said the $450,000 threshold "means the lion's share of the burden of deficit reduction falls on the middle class, either in terms of higher taxes down the road or fewer government services." In addition, he said, the plan does nothing to raise the federal debt ceiling just as the federal government bumps up against its borrowing limit.
And that, Arizona GOP Sen. John McCain told CNN, is likely to be "a whole new field of battle."
"We just added 2.1 trillion in the last increase in the debt ceiling, and spending continues to go up," McCain said. "I think there's going to be a pretty big showdown the next time around when we go to the debt limit."
CNN's Matt Smith, Mike Pearson, Jessica Yellin, Dana Bash, Deirdre Walsh, Lisa Desjardins, Ted Barrett and Ashley Killough contributed to this report.
- Created on 02 January 2013
House Passes Bill to Avert Fiscal Cliff, But More Trouble Lies Ahead
(CNN) -- After exhaustive negotiations that strained the country's patience, the House approved a bill to avert the dreaded fiscal cliff, staving off widespread tax increases and deep spending cuts.
In the 257-167 vote late Tuesday, 172 Democrats and 85 Republicans favored the bill; 16 Democrats and 151 Republicans opposed it.
The approved plan maintains tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000. It will raise tax rates for those who make more, marking the first time in two decades the rates jump for the wealthiest Americans.
The bill also extends unemployment insurance and delays for two months a series of automatic cuts in federal spending.
World markets rose after the news. U.S. stocks were poised to rise, too.
Just hours before the bill passed, House Speaker John Boehner pitched to fellow Republicans the idea of amending the Senate-approved bill to add a package of spending cuts. He cautioned about the risk in such a strategy, saying there was no guarantee the Senate would act on it.
By the end of the night, he was among the Republicans who voted for the bill as written.
President Barack Obama said he would sign the bill into law, but he did not say when. After the vote, he flew to Hawaii to rejoin his wife and daughters on their winter vacation.
Had the House not acted, and the Bush-era tax cuts expired fully, broad tax increases would have kicked in. In addition, $110 billion in automatic cuts to domestic and military spending would have taken place.
The combined effect could have dampened economic growth by 0.5%, possibly tipping the U.S. economy back into a recession and driving unemployment from its current 7.7% back over 9%, according to economists' estimates.
While the package provides some short-term certainty, it leaves a range of big issues unaddressed.
It doesn't mention the $16.4 trillion debt ceiling that the United States reached Monday.
It also puts off the so-called sequester, cuts in federal spending that would have taken effect Wednesday and reduced the budgets of most agencies and programs by 8% to 10%.
Come late February, Congress will have to tackle both those thorny issues.
Obama warned Congress that he will not tolerate another act of prolonged brinksmanship.
"While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they've already racked up through the laws that they've passed," he said after the Tuesday night vote.
"We can't not pay bills that we've already incurred. If Congress refuses to give the United States government the ability to pay these bills in time, the consequences for the entire global economy would be catastrophic -- far worse than the impact of the fiscal cliff."
How they voted: House | Senate
A partial victory
While the deal gives Obama bragging rights for raising taxes on the wealthiest Americans, it also leaves him breaking a promise.
Obama had vowed to raise tax rates for the top-earning 2% of Americans, including those with household income above $250,000 and individuals earning more than $200,000.
Raising the threshold for higher tax rates shrinks the number of Americans affected.
While nearly 2% of filers have adjusted gross incomes over $250,000, only 0.6% have incomes above $500,000, according to the Tax Policy Center.
Some House Republicans weren't exactly overjoyed in voting for the plan.
"I'm a very reluctant yes," said Rep. Nan Hayworth, an outgoing Republican representative from New York.
"This is the best we can do, given the Senate and the White House sentiment at this point in time, and it is at least a partial victory for the American people," she said. "I'll take that at this point."
Conservative lobbyist Grover Norquist, whose Americans for Tax Reform pushes candidates to sign a pledge never to raise taxes, said the plan preserves most of the Bush tax cuts and won't violate his group's beliefs.
"The Bush tax cuts lapsed at midnight last night," Norquist tweeted Tuesday. "Every (Republican) voting for Senate bill is cutting taxes and keeping his/her pledge."
The timing of the vote was crucial, as a new Congress is set to be sworn in Thursday. And without a breakthrough, the entire process would have had to start over.
Specifics of the plan
The legislation will raise roughly $600 billion in new revenues over 10 years, according to various estimates.
According to the deal:
-- The tax rate for individuals making more than $400,000 and couples making more than $450,000 will rise from the current 35% to the Clinton-era rate of 39.6%.
-- Itemized deductions will be capped for individuals making $250,000 and for married couples making $300,000.
-- Taxes on inherited estates will go up to 40% from 35%.
-- Unemployment insurance will be extended for a year for 2 million people.
-- The alternative minimum tax, a perennial issue, will be permanently adjusted for inflation.
-- Child care, tuition and research and development tax credits will be renewed.
-- The "Doc Fix" -- reimbursements for doctors who take Medicare patients -- will continue, but it won't be paid for out of the Obama administration's signature health care law.
The Democratic-led Senate overwhelmingly approved the bill early Tuesday before passing it to the House.
As news about the fiscal cliff's deflection spread across the world, several markets reacted positively Wednesday.
Australia's ASX All Ordinaries index added 1.2%. South Korea's KOSPI gained 1.5%, and the Hang Seng in Hong Kong advanced 1.9%. Tokyo's Nikkei and the Shanghai Composite remain closed for holiday celebrations but will reopen later in the week.
Payroll taxes still set to go up
Despite the last-minute fiscal cliff agreements, Americans are still likely to see their paychecks shrink somewhat because of a separate battle over payroll taxes.
The government temporarily lowered the payroll tax rate in 2011 from 6.2% to 4.2% to put more money in the pockets of Americans. That adjustment, which has cost about $120 billion each year, expired Monday.
Now, Americans earning $30,000 a year will take home $50 less per month. Those earning $113,700 will lose $189.50 a month.
With the latest battle round over, lawmakers will next set their sights on the other items on their docket of congressional squabbles over money: the debt ceiling and resolving the sequester.
Obama said he hopes leaders in Washington this year will focus on "seeing if we can put a package like this together with a little bit less drama, a little less brinksmanship (and) not scare the heck out of folks quite as much."
He thanked bipartisan House and Senate leaders for finally reaching a resolution Tuesday, but said Congress' work this year is just beginning.
"I hope that everybody now gets at least a day off I guess, or a few days off, so that people can refresh themselves, because we're going to have a lot of work to do in 2013."
Angry rhetoric flew
In the tense days leading up to the deal, heated words flew between some Democrats and Republicans.
On Friday, after Democratic Senate Majority Leader Harry Reid accused Boehner of holding a "dictatorship" in his chamber, the House speaker responded with a profanity.
"Go f--- yourself," Boehner said to Reid, according to a source with knowledge of the exchange in a White House lobby.
Dana Bash reported from Washington, and Holly Yan reported from Atlanta. CNN's Rich Barbieri, Charles Riley, Josh Levs, Dana Ford, Matt Smith, Jessica Yellin, Deirdre Walsh and Ted Barrett contributed to this report.
- Created on 31 December 2012
Hillary Rodham Clinton Admitted To Hospital With Blood Clot Following Concussion
(AP) — Secretary of State Hillary Rodham Clinton has been admitted to a New York hospital after the discovery of a blood clot stemming from the concussion she sustained earlier this month.
Clinton spokesman Philippe Reines says her doctors discovered the clot during a follow-up exam Sunday. Reines says Clinton is being treated with
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